The Connection Between Monetary Policy and Housing Prices: Public Perception and Expert Communication
Philipp Poyntner, Sofie R. Waltl
TL;DR
This paper investigates how the general public perceives the monetary policy–housing nexus and how expert information shifts those beliefs. It uses a large cross-country survey-experiment in five European countries with an information-treatment design that contrasts central-bank and academic economists. Key findings show broad intuitive awareness of a housing-channel, substantial gaps in unconventional monetary policy literacy, and meaningful belief updates when credible expert information is provided, especially from academics. The results imply that housing-focused communication and collaboration with academic experts can enhance policy transmission and public trust.
Abstract
We study how the general public perceives the link between monetary policy and housing markets. Using a large-scale, cross-country survey experiment in Austria, Germany, Italy, Sweden, and the United Kingdom, we examine households' understanding of monetary policy, their beliefs about its impact on house prices, and how these beliefs respond to expert information. We find that while most respondents grasp the basic mechanisms of conventional monetary policy and recognize the connection between interest rates and house prices, literacy regarding unconventional monetary policy is very low. Beliefs about the monetary policy-housing nexus are malleable and respond to information, particularly when it is provided by academic economists rather than central bankers. Monetary policy literacy is strongly related to education, gender, age, and experience in housing and mortgage markets. Our results highlight the central role of housing in how households interpret monetary policy and point to the importance of credible and inclusive communication strategies for effective policy transmission.